Loan Deferment and Forbearance Options

Loan Deferment

During a deferment, you are allowed to temporarily postpone payments on your loan, and no interest accrues.  Loans are deferred when the borrower is:

  • Pursuing at least half-time study at an eligible school;
  • In a graduate fellowship program approved by the U.S. Department of Education;
  • In an approved rehabilitation training program for the disabled;
  • Conscientiously seeking but unable to find full-time employment;
  • Experiencing economic hardship.

Other deferments may be available to the borrower if, at the time they obtained a Direct Loan, they had an outstanding balance on a Federal Stafford Loan, Guaranteed Student Loan, Federal Insured Student Loan, Federal PLUS Loan, Federal SLS Loan, ALAS Loan, or Federal Consolidation Loan made before July 1, 1993. The Direct Loan can also be deferred under the following conditions, when the borrower is:

  • Serving in the U.S. Armed Forces, in the Commissioned Corps of the Public Health Service, or in the Peace Corps;
  • Serving as a full-time paid volunteer for ACTION programs or an approved tax-exempt organization;
  • Temporarily totally disabled according to the certification of a qualified physician, or caring for a spouse or other dependent who is temporarily totally disabled;
  • Engaged in an internship or residency program;
  • Serving in the National Oceanic and Atmospheric Administration Corps;
  • Teaching full-time in a public or nonprofit private elementary or secondary school in an area the U.S. Department of Education has determined to be a teacher shortage area;
  • A mother of a preschool-age child, and has entered or re-entered the work force within the preceding year in a full-time position at a salary not more than $1 above the minimum wage;
  • On parental leave. If the borrower is pregnant, caring for a newborn child, or caring for a newly adopted child, he/she may qualify. The borrower must be unemployed, must not be a student, and must apply within six months after leaving school or dropping below half-time status.

Borrowers apply for deferments through the Direct Loan Servicing Center: they are not automatically granted.
Borrowers must also understand there may be time limits placed on some of the deferments listed above.

Forbearance

Forbearance is the temporary postponement or reduction of payments for a limited period. Reasons for forbearance include:

  • Inability to make loan payments due to poor health or other acceptable reasons;
  • Serving a medical or dental internship or residency;
  • Loan repayment obligations that equal 20% or more of monthly gross income.